Free trade agreement of the post-World War II period that initially included 25 countries.
Created in 1947 and guided by the United States, the General Agreement on Trade and Tariffs (GATT) reflected both the continuation of long-standing attitudes in U.S. trade policy and the realization of greatly changed circumstances necessitating a more involved and sustained role for the United States in world affairs. GATT represented many of the same concerns expressed at the Bretton Woods Conference in 1944—namely, the need to promote and to sustain postwar economic recovery generally and world trade specifically. GATT targeted tariffs, and European trade barriers particularly, as impediments to this process.
In all, GATT included eight rounds of negotiations: Geneva (1947), Annecy, France (1949), Torquay, England (1951), Geneva (1956), Geneva (1960-1962), Geneva (1962-1967), Tokyo (1973-1979), and Punta del Este, Uruguay (1986-1994). The final two Geneva rounds of the negotiations are sometimes referred to as the Dillon round (named for Undersecretary of State Douglas Dillon) and the Kennedy round (named for the recently assassinated President John F. Kennedy). Five rounds of negotiations between 1947 and 1962 reduced tariffs by 73 percent. Although primarily a U.S.-led initiative, GATT became affiliated with the United Nations after the Geneva round in 1956. Subsequent rounds of negotiations in Geneva during the administrations of Presidents John F. Kennedy and Lyndon B. Johnson reduced tariffs by an additional 35 percent. Moreover, although negotiations were dedicated to tariff reduction, by the mid-1960s the final stages of the Kennedy round produced a preliminary, yet significant, antidumping agreement (an agreement that prohibits the sale of foreign goods at below-market prices and thereby eliminates unfair competition between countries).
Focused primarily on manufactured goods, the early rounds of GATT negotiations reached no agreement on agricultural subsidies and nontariff trade barriers. European agricultural interests successfully frustrated attempts to broaden the talks to address agricultural products. Additionally, Japan unabashedly maintained a series of procedural and structural barriers to foreign firms seeking to penetrate its market. The Tokyo round of GATT negotiations (1973-1979) involved more than 100 participating countries and represented a major attempt to address many of these nontariff trade barriers. These negotiations produced agreements (subsequently referred to as codes) on subsidies, technical barriers to trade, import licensing procedures, customs valuation, and other aspects of international trade. Wide disagreement continues over the actual effectiveness of these codes. The talks further reduced the average tariff on manufactured goods to 4.7 percent. However, the Tokyo round failed to reach any significant agreements on agricultural commodities. Also, technology issues created further problems, particularly with regard to copyright and other intellectual property issues.
The final round of talks, the Uruguay round (1986-1994), proved particularly problematic for these reasons. Nonetheless, this final round of negotiations proved successful in further reducing tariffs on manufactured goods. The Uruguay round also attempted to address some of the many issues pertaining to agriculture, services trade, and intellectual property rights. After the Uruguay round, the GATT was transformed into the World Trade Organization (WTO) in 1995.
